Question 1

The condition for hiring factors of production- that is, where MFC = MRP- is analogous to the profit-maximizing output condition:

Accepted Answer

A)  TR = TC. 
B)  MR = MC. 
C)  AR = ATC. 
D)  P = MR. 
A)  TR = TC. 
B)  MR = MC. 
C)  AR = ATC. 
D)  P = MR.

Question 2

The substitution effect of a higher wage causes workers to substitute labor for leisure.

Accepted Answer

A) True 
 B)False

Question 3

In perfect competition where P is the price of output:

Accepted Answer

A)  MRPL = MPL x P. 
B)  MRPL/MPL = PL. 
C)  MRP/P = MPK. 
D)  MRPL x P = MPL. 
A)  MRPL = MPL x P. 
B)  MRPL/MPL = PL. 
C)  MRP/P = MPK. 
D)  MRPL x P = MPL.

Question 4

If the _______ of labor is increased, ceteris paribus, eventually the _______ will ________.

Accepted Answer

A)  price; supply of labor; increase 
B)  quantity; marginal product of labor; fall 
C)  quantity; marginal product of labor; rise 
D)  quantity; marginal revenue product of labor, rise 
A)  price; supply of labor; increase 
B)  quantity; marginal product of labor; fall 
C)  quantity; marginal product of labor; rise 
D)  quantity; marginal revenue product of labor, rise

Question 5

Use the following to answer question(s): Demand and Supply of Bricklayers in a Perfectly Competitive Labor Market
  
-(Exhibit: Demand and Supply of Bricklayers in a Perfectly Competitive Labor Market) If the price (wage) of bricklayers is $100 per day, _______ bricklayers will be hired.

Accepted Answer

A)  4 
B)  5 
C)  6 
D)  There is insufficient information to make this decision. 
A)  4 
B)  5 
C)  6 
D)  There is insufficient information to make this decision.

Question 6

The amount a firm adds to total cost when one more unit of a factor is added to production is MFC.

Accepted Answer

A) True 
 B)False

Question 7

Use the following to answer question(s): Wage Determination in Perfect Competition
  
-(Exhibit: Wage Determination in Perfect Competition) Which of the following is true?

Accepted Answer

A)  The firm will hire L₁ units of labor, as shown in Panel (a). 
B)  The labor market will hire l₁ units of labor, as shown in Panel (b). 
C)  The wage of labor is W₁. 
D)  The curve labeled s₁ in Panel (b) is the firm's demand curve for labor. 
A)  The firm will hire L₁ units of labor, as shown in Panel (a). 
B)  The labor market will hire l₁ units of labor, as shown in Panel (b). 
C)  The wage of labor is W₁. 
D)  The curve labeled s₁ in Panel (b) is the firm's demand curve for labor.

Question 8

A decrease in the price of labor will shift the MRP curve to the right.

Accepted Answer

A) True 
 B)False

Question 9

Use the following to answer question(s): Demand and Supply in a Perfectly Competitive Labor Market
  
-(Exhibit: Demand and Supply in a Perfectly Competitive Labor Market) Curve B is the:

Accepted Answer

A)  supply of labor the firm faces. 
B)  demand for labor the firm faces. 
C)  industry supply curve of labor. 
D)  MRPL. 
A)  supply of labor the firm faces. 
B)  demand for labor the firm faces. 
C)  industry supply curve of labor. 
D)  MRPL.

Question 10

Marginal revenue product is calculated as:

Accepted Answer

A)  MP ÷ MR. 
B)  MP ÷ P. 
C)  MP × MR. 
D)  MR ÷ MP. 
A)  MP ÷ MR. 
B)  MP ÷ P. 
C)  MP × MR. 
D)  MR ÷ MP.

Question 11

A change in nonwage income will shift the labor supply curve.

Accepted Answer

A) True 
 B)False

Question 12

According to the Case in Point on computer technology and demand for workers, which of the following tasks has undergone a decreased demand for labor as the price of computers has decreased?

Accepted Answer

A)  record-keeping 
B)  forming & testing hypothesis 
C)  medical diagnosis 
D)  janitorial services 
A)  record-keeping 
B)  forming & testing hypothesis 
C)  medical diagnosis 
D)  janitorial services

Question 13

Among the determinants of the demand for labor are:

Accepted Answer

A)  substitute availability. 
B)  the supply of labor. 
C)  the wage rate. 
D)  the slope of the demand for labor curve. 
A)  substitute availability. 
B)  the supply of labor. 
C)  the wage rate. 
D)  the slope of the demand for labor curve.

Question 14

For a firm operating in a perfectly competitive output market, if MP is rising, MRP must be falling.

Accepted Answer

A) True 
 B)False

Question 15

Use the following to answer question(s): Demand and Supply of Bricklayers in a Perfectly Competitive Labor Market
  
-(Exhibit: Demand and Supply of Bricklayers in a Perfectly Competitive Labor Market) If the price (wage) of bricklayers is $100, the MFCBRICKLAYERS is:

Accepted Answer

A)  less. 
B)  the same. 
C)  greater. 
D)  there is insufficient information to determine the MPCBRICKLAYERS. 
A)  less. 
B)  the same. 
C)  greater. 
D)  there is insufficient information to determine the MPCBRICKLAYERS.

Question 16

A wage _______ raises the quantity of labor supplied through the _______ effect.

Accepted Answer

A)  decrease; substitution 
B)  increase; substitution 
C)  increase; income 
D)  decrease; complement 
A)  decrease; substitution 
B)  increase; substitution 
C)  increase; income 
D)  decrease; complement

Question 17

Marginal factor cost is the:

Accepted Answer

A)  amount a factor adds to a firm's total revenue per period. 
B)  change in the quantity of the factor divided by the change in total cost. 
C)  change in total cost divided by the change in the quantity of the factor. 
D)  same as marginal fixed cost. 
A)  amount a factor adds to a firm's total revenue per period. 
B)  change in the quantity of the factor divided by the change in total cost. 
C)  change in total cost divided by the change in the quantity of the factor. 
D)  same as marginal fixed cost.

Question 18

Use the following to answer question(s): Demand and Supply of Bricklayers in a Perfectly Competitive Labor Market
  
-(Exhibit: Demand and Supply of Bricklayers in a Perfectly Competitive Labor Market) Which of the following statements is true?

Accepted Answer

A)  Bricklayers should be hired whenever the marginal revenue product of bricklayers is less than the marginal factor cost of bricklayers. 
B)  The profit-maximizing condition for the firm hiring bricklayers is where MRPBRICKLAYERS is greater than the MFCBRICKLAYERS. 
C)  The profit-maximizing condition for a firm hiring bricklayers is where MRBRICKLAYERS equals the MFCBRICKLAYERS. 
D)  Bricklayers should be hired whenever the marginal factor cost of bricklayers is greater than the marginal revenue product of bricklayers. 
A)  Bricklayers should be hired whenever the marginal revenue product of bricklayers is less than the marginal factor cost of bricklayers. 
B)  The profit-maximizing condition for the firm hiring bricklayers is where MRPBRICKLAYERS is greater than the MFCBRICKLAYERS. 
C)  The profit-maximizing condition for a firm hiring bricklayers is where MRBRICKLAYERS equals the MFCBRICKLAYERS. 
D)  Bricklayers should be hired whenever the marginal factor cost of bricklayers is greater than the marginal revenue product of bricklayers.

Question 19

When a(n) _______ in the use of one factor _______ the demand for another factor, the two factors are complementary factors of production.

Accepted Answer

A)  decrease; increases 
B)  increase; increases 
C)  decrease; does not change 
D)  increase; does not change 
A)  decrease; increases 
B)  increase; increases 
C)  decrease; does not change 
D)  increase; does not change

Question 20

Leisure is an inferior good.

Accepted Answer

A) True 
 B)False

The condition for hiring factors of production- that is, where MFC = MRP- is analogous to the profit-maximizing output condition:

The substitution effect of a higher wage causes workers to substitute labor for leisure.

In perfect competition where P is the price of output:

If the ___ of labor is increased, ceteris paribus, eventually the _ will ______.

Use the following to answer question(s): Demand and Supply of Bricklayers in a Perfectly Competitive Labor Market -(Exhibit: Demand and Supply of Bricklayers in a Perfectly Competitive Labor Market) If the price (wage) of bricklayers is $100 per day, _______ bricklayers will be hired.

The amount a firm adds to total cost when one more unit of a factor is added to production is MFC.

Use the following to answer question(s): Wage Determination in Perfect Competition -(Exhibit: Wage Determination in Perfect Competition) Which of the following is true?

A decrease in the price of labor will shift the MRP curve to the right.

Use the following to answer question(s): Demand and Supply in a Perfectly Competitive Labor Market -(Exhibit: Demand and Supply in a Perfectly Competitive Labor Market) Curve B is the:

Marginal revenue product is calculated as:

A change in nonwage income will shift the labor supply curve.

According to the Case in Point on computer technology and demand for workers, which of the following tasks has undergone a decreased demand for labor as the price of computers has decreased?

Among the determinants of the demand for labor are:

For a firm operating in a perfectly competitive output market, if MP is rising, MRP must be falling.

Use the following to answer question(s): Demand and Supply of Bricklayers in a Perfectly Competitive Labor Market -(Exhibit: Demand and Supply of Bricklayers in a Perfectly Competitive Labor Market) If the price (wage) of bricklayers is $100, the MFCBRICKLAYERS is:

A wage _ raises the quantity of labor supplied through the _ effect.

Marginal factor cost is the:

Use the following to answer question(s): Demand and Supply of Bricklayers in a Perfectly Competitive Labor Market -(Exhibit: Demand and Supply of Bricklayers in a Perfectly Competitive Labor Market) Which of the following statements is true?

When a(n) _ in the use of one factor _ the demand for another factor, the two factors are complementary factors of production.

Leisure is an inferior good.

Economics: The Study of Choice

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Supply and Demand

Elasticity: a Measure of Response

Markets, Maximizers, and Efficiency

The Analysis of Consumer Choice

Production and Cost

Competitive Markets for Goods and Services

Monopoly

The World of Imperfect Competition

Interest Rates and the Markets for Capital and Natural Resources

Imperfectly Competitive Markets for Factors of Production

Public Finance and Public Choice

Antitrust Policy and Business Regulation

International Trade

The Economics of the Environment

Inequality, Poverty, and Discrimination

Filters

Exam 12: Wages and Employment in Perfect Competition

The condition for hiring factors of production- that is, where MFC = MRP- is analogous to the profit-maximizing output condition:

The substitution effect of a higher wage causes workers to substitute labor for leisure.

In perfect competition where P is the price of output:

If the _______ of labor is increased, ceteris paribus, eventually the _______ will ________.

Use the following to answer question(s): Demand and Supply of Bricklayers in a Perfectly Competitive Labor Market -(Exhibit: Demand and Supply of Bricklayers in a Perfectly Competitive Labor Market) If the price (wage) of bricklayers is $100 per day, _______ bricklayers will be hired.

The amount a firm adds to total cost when one more unit of a factor is added to production is MFC.

Use the following to answer question(s): Wage Determination in Perfect Competition -(Exhibit: Wage Determination in Perfect Competition) Which of the following is true?

A decrease in the price of labor will shift the MRP curve to the right.

Use the following to answer question(s): Demand and Supply in a Perfectly Competitive Labor Market -(Exhibit: Demand and Supply in a Perfectly Competitive Labor Market) Curve B is the:

Marginal revenue product is calculated as:

A change in nonwage income will shift the labor supply curve.

According to the Case in Point on computer technology and demand for workers, which of the following tasks has undergone a decreased demand for labor as the price of computers has decreased?

Among the determinants of the demand for labor are:

For a firm operating in a perfectly competitive output market, if MP is rising, MRP must be falling.

Use the following to answer question(s): Demand and Supply of Bricklayers in a Perfectly Competitive Labor Market -(Exhibit: Demand and Supply of Bricklayers in a Perfectly Competitive Labor Market) If the price (wage) of bricklayers is $100, the MFCBRICKLAYERS is:

A wage _______ raises the quantity of labor supplied through the _______ effect.

Marginal factor cost is the:

Use the following to answer question(s): Demand and Supply of Bricklayers in a Perfectly Competitive Labor Market -(Exhibit: Demand and Supply of Bricklayers in a Perfectly Competitive Labor Market) Which of the following statements is true?

When a(n) _______ in the use of one factor _______ the demand for another factor, the two factors are complementary factors of production.

Leisure is an inferior good.

Economics: The Study of Choice

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Supply and Demand

Elasticity: a Measure of Response

Markets, Maximizers, and Efficiency

The Analysis of Consumer Choice

Production and Cost

Competitive Markets for Goods and Services

Monopoly

The World of Imperfect Competition

Interest Rates and the Markets for Capital and Natural Resources

Imperfectly Competitive Markets for Factors of Production

Public Finance and Public Choice

Antitrust Policy and Business Regulation

International Trade

The Economics of the Environment

Inequality, Poverty, and Discrimination

Filters

If the ___ of labor is increased, ceteris paribus, eventually the _ will ______.

A wage _ raises the quantity of labor supplied through the _ effect.

When a(n) _ in the use of one factor _ the demand for another factor, the two factors are complementary factors of production.